On August 14, 2024, the Federal Trade Commission (FTC) announced a final rule that identifies a variety of online review-related practices as unfair or deceptive trade practices. This includes (i) implying that reviews exist when they do not, (ii) posting fake reviews, (iii) paying for positive or negative reviews and (iv) having insiders post reviews without disclosing their relationship to the company. The final rule also makes it an unfair or deceptive practice for companies to suppress or take actions to suppress reviews. In short, the FTC's new rule attempts to crack down on what it sees as a manipulation of online reviews by companies.
If you are a company that solicits reviews or obtains reviews online, it is important to understand the contours of this new rule and ensure that your practices comply with it.
In Depth
WHO DOES THE FINAL RULE APPLY TO?
The FTC's rule applies broadly to any business (subject to FTC authority) that sells products or services. In short, most for-profit companies in the US are subject to this new rule.
WHAT IS A CONSUMER REVIEW?
A consumer review is a "consumer's evaluation, or a purported consumer's evaluation, of a product, service, or business that is submitted by the consumer or purported consumer and that is published to a website or platform dedicated in whole or in part to receiving and displaying such evaluations."
This broad definition captures not only narrative reviews but also star ratings or rankings (e.g., one star).
WHAT THE FINAL RULE DOES
The rule has several distinct parts, each which seeks to limit what the FTC has now labeled as unfair or deceptive trade practices:
- Fake or False Consumer Reviews The rule declares it an unfair or deceptive trade practice for a company to buy, sell or host reviews that they know or should have known to be from someone who did not have experience with the product or service.
- Buying Positive or Negative Consumer Reviews
Under the rule, it is an unfair and deceptive trade practice to pay for or condition services on submitting a positive or negative review. - Threatening Consumers to Remove Negative Reviews
The rule also deems it an unfair or deceptive trade practice for a business to threaten consumers to remove their negative reviews. - Publishing Reviews From Company Insiders Without
Disclosing the Relationship
It is now an unfair or deceptive trade practice for officers or managers of a company to submit a review without disclosing their relationship to the company. - Suppressing Reviews
The rule makes clear that it is an unfair and deceptive trade practice to suppress reviews for reasons other than content moderation (e.g., foul language, violations of terms of service). Companies cannot pick and choose which reviews are represented as the newest or most helpful, for example. - Buying or Selling Fake Social Media Likes, Followers,
Etc.
Finally, the rule declares it an unfair or deceptive trade practice for anyone to buy or sell fake indicators of social media influence (e.g., bots or fake accounts that increase likes, views, comments or other social media engagement).
WHAT ARE THE PENALTIES?
As with any other FTC claim of an unfair or deceptive trade practice, the FTC can bring an enforcement action seeking in excess of $50,000 per alleged violation.
WHEN DOES THE FINAL RULE TAKE EFFECT?
The new rule will go into effect on October 13, 2024, 60 days after it is published in the Federal Register.
PREPARING FOR THE FINAL RULE
Almost every company on the internet seeks out positive reviews. Indeed, there is an entire ecosystem of companies that assist companies in obtaining positive reviews and otherwise promoting products online. In light of this new rule, companies that offer consumer products in particular will want to examine their practices for soliciting reviews and posting (or suppressing reviews) to ensure compliance with this new rule.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.